India sends first Afghanistan-bound shipment via Iran’s sole oceanic port Chabahar

India sends first Afghanistan-bound shipment via Iran’s sole oceanic port Chabahar
Work on developing Chabahar has been slow with India claiming Iran's ongoing fraught relationship with the US has proved a problem, with potential suppliers fearing sanctions.
By bne IntelliNews October 30, 2017

India has started opening up a new trade route to landlocked Afghanistan via Iran’s Chabahar port, an option that allows the Indians to avoid regional rival Pakistan. Citing Indian media outlets, RFE/RL reported that on October 29 a trial shipment of 1.1mn tonnes of wheat was sent on its way to Afghanistan on a route taking it through Chabahar, a port India has agreed to jointly operate and develop with Iran.

The Indians have been substantially delayed in developing and launching their part of the port—Iran’s only oceanic port, located on the Gulf of Oman with direct access to the Indian Ocean—to which it has committed significant investment. In recent months, Iran has publicly said that New Delhi is not meeting its commitments in developing infrastructure. However, India has experienced difficulties in finding suppliers to equip the port given anxiety among companies that fear being hit by US sanctions should they work on a major investment project in Iran.

Under the trial shipment, India is shipping the wheat to Afghanistan from its western seaport of Kandla. It is to be carried overland by truck to Kabul.

"I believe that this is the starting point of our journey to realise the full spectrum of connectivity from culture to commerce, from traditions to technology, from investments to IT, from services to strategy and from people to politics," Indian External Affairs Minister Sushma Swaraj reportedly told local media on October 29.

That statement was followed by words from Indian Prime Minister Narendra Modi. He tweeted that the launch "marks a new chapter in regional cooperation & connectivity."

Pakistan has banned India from sending goods consignments to Afghanistan via its territory. Since last year, India has, however, been able to send goods to Kabul via an air-freight corridor.

India previously committed $500mn for the development of Chabahar port, but in recent years the country has dragged its feet over investing in the project. Chabahar is meant to rival the already built Gwadar port in neighbouring Pakistan which was built and paid for by funds from China, which has a monopoly on access to the facility.

By using Chabahar, which is located less than 80km from Gwadar, India can also make trade inroads into the Central Asian republics.

In line with an existing MoU signed by Iran and India in May last year, India is to equip and operate two berths in Chabahar Port Phase-I with a capital investment of $85.2mn and annual revenue expenditure of $22.95mn on a 10-year lease.

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